US railroads to agree to speed limits, more inspections of crude shipments

Orlando, Florida (Platts)--19 Feb 2014 303 pm EST/2003 GMT

US railroads likely will agree to reduced speed limits when carrying crude in populated areas and increased inspections under a forthcoming pact with the Department of Transportation to boost the safety of crude-by-rail shipments, the head of the Association of American Railroads said Wednesday.

Speaking at the National Ethanol Conference in Orlando, Florida, AAR President and CEO Ed Hamberger said railroads also likely would agree to distributed power or end-of-train devices that will apply braking power to both ends of a train, reducing stop time.

"I would expect an announcement by the secretary as soon as we can come to some understanding with him in the next week," Hamberger said, adding that the voluntary measures would apply to crude shipments only, not ethanol.

Supply and demand trends, government actions, exploration and technology

Daily futures summary

Weekly API statistics, and much more

"That is focused on crude-by-rail, but I would expect regulators to continue to talk to us about other hazardous materials, like ethanol," he said.

Transportation department officials could not immediately be reached for comment.

Transportation Secretary Anthony Foxx in January had asked AAR, the American Petroleum Institute and the American Short Line and Regional Railroad Association, to report by Friday recommendations on how to improve crude-by-rail safety, including speed restrictions, inspection regimens, best practices on classifying shipments and more robust emergency response capabilities.

The request came in the wake of a series of accidents involving crude shipments, most notably July's derailment of a train carrying Bakken crude in Lac-Megantic, Quebec. The resulting explosion and fire killed 47 people.

Hamberger said that before his trade group's recommendations are finalized, US railroads are trying to reach an agreement with DOT on a risk model to choose which routes crude-by-rail shipments will use.

He noted that speed restrictions in urban areas could have a ripple effect on the entire network.

"We don't want to slow down commuter rails, Amtrak," Hamberger said. "We don't want your products to not get to where they need to be. We have to think about the unintended consequences."

Meanwhile, the DOT's Pipelines and Hazardous Materials Safety Administration is considering new safety regulations on crude-by-rail shipments, including whether to require phasing out or retrofitting older tank cars that do not have the latest safety technologies installed. The agency is due to propose its rule by November.

Bob Dinneen, president and CEO of the Renewable Fuels Association, said he remains concerned that the rulemaking could lead to a shortage of compliant tank cars for ethanol shipments.

Speaking on a panel with Hamberger on the "regulatory crackdown on rail transport," Dinneen said he would rather see safety regulators focus on preventing derailments, instead of placing new requirements on tank cars, noting that the Lac-Megantic disaster would not have been prevented even if the safest tank cars had been in use.

"None of this is addressing the root cause," Dinneen said of the rulemaking, adding that RFA wants to "make sure this process is focusing as much on operations and infrastructure, as it is for tank cars."

Put more plainly, "keep the damn trains on the tracks," Dinneen said.

It's an area of agreement for the ethanol and oil industries, who are otherwise traditional foes.

"There's a real concern that DOT, in political expediency, is trying to focus on tank cars without solving the underlying cause of safety," said Bob Greco, the API's group director of downstream and industry operations, who spoke on a panel at the conference Tuesday. "Let's fix derailments. We haven't seen any data that retrofits will create more safety."